If You Build It, They Will Come

"If you build it, they will come." Thus heard Ray Kinsella in "Field of Dreams". Well, not exactly; it was "he" not "they", although in the movie, it is the Black Sox players who show up, starting with Shoeless Joe Jackson. And the quote with "they" is often used. Not least when discussing capital investment in residential and commercial real estate. A bete noir of this endeavor is real estate investment. Along with purely fiduciary instruments (stocks, bonds), real estate investment doesn't generate real returns in production. As a result, in order to get fiduciary returns to pay the vig, somewhere back up the economic chain, extra moolah has to be extracted. The assumption, both by public officials and private real estate speculators, is that such funds will be found. Aye, matey, thar's the rub. Just as the giant vampire squid sucked cash from the saver to borrower stream, non-productive use of capital has to "steal" its return from real production.

Oddly, the Right Wingnuts, who are happy to practice weaponized Keynesianism, refuse to accept that real growth requires real return on invested funds. Today's patient is China, mentioned before. Here we can read the gory details of public and private decisions in thrall to making buildings. Perhaps China needs a "One Building Policy" to go along with its "One Child Policy". For much the same reason.

The problem with basing an economy on construction can be seen in Florida. I no longer remember the cite, but there was a quote (paraphrasing from memory) along the lines of, "high school dropouts need to find something more productive than pounding nails". China has used building, both public buildings and infrastructure (all that high speed rail, for instance) as well as private housing speculation, as the means of re-distributing wealth. Few, especially the Right Wingnuts, ever admit that Keynesian mechanisms are explicitly distributional, but that's what they are. In the case of weapons systems, of course, the Right Wingnuts are more than eager to squander the nation's wealth on killing. Those Red Staters, mentioned previously, would still be drinking and shitting in the creeks and eating their possums by kerosene lamps were it not for the TVA (courtesy of FDR). Try calculating the return on the investment in those dams, reservoirs, and power houses. Today's Democrats might consider the effort suicidal.

The productive value of public infrastructure is notoriously difficult to quantify. I always chuckle when some new highway or rail line is promoted because it will save X minutes of commuting per day for Y thousands of citizens. And, since a citizen's time is worth at least $Z, then the "return" on the highway or rail line is (X/60 * Y * Z) dollars. Of course not, especially for highways. In that case, they do come and fill up the lanes. As an adjunct to general economic growth in the areas served by the highway, then more transport is worthwhile. But then we get into the whole "public goods" squabble, which sends the Right Wingnuts into apoplexy, since they only admit to weaponry as a public good. Well, and cops to keep the darker folk in their places. And if their pet corporation wants an exit ramp next to this new highway.

What the current Chinese experience tells us is simple: an economy which is inherently inequitable in its distribution (and the Chinese model of exporting poverty is among the worst) of income has to find a method of re-distribution which both works and does so below the radar of its Right Wingnuts. Infrastructure building, especially when carried out by companies with deep ties to government, is always an early choice. The problem for China is that building buildings is inherently temporary. In time, the whole landscape will be covered in concrete (or hurricane fodder in Florida). Then what do you do?

Economic data released on Sunday by the National Bureau of Statistics showed the extent of the problems. Investment in new buildings and other fixed assets is in the doldrums. Manufacturers are retreating from ambitious production goals as they struggle with bloated inventories of unsold goods. Even the service sector, still underdeveloped and widely seen by economists as full of potential, is showing signs of distress.

I wonder whether the Chinese, whom the reporter is paraphrasing, or the reporter himself get the irony: service work is just as non-productive and re-distributional as infrastructure building. The only difference is that service sector employment can be perpetual. "One from the In Box, two to the Out Box. Lunch. Go home." Yes, done with foresight and intelligence, infrastructure building can support macroeconomic growth; the Red Staters know this implicitly even if they won't admit it. The Chinese zeal has, especially recently, been plagued with corruption and shoddy performance.

The moral of the story, being both from Aesop and Confucius the story has to have one, and it is this: "It's the Distribution, Stupid". The Chinese, having chosen to export poverty with its manufacturing, has turned to building as its re-distribution regime. FDR did so, too, but in a completely different macroeconomic environment. FDR faced idle, existing, manufacturing capacity. His goal was to increase capacity utilization, thus putting Americans back to work doing what they'd been doing. The current US problem is that too many of those tossed out of the economy in the Great Recession were doing non-productive work; systems analysts and teachers and such. It turns out, an economy can get along quite nicely without them. Not to mention all those Wall Street worker bees, collateral damage done by those higher up the food chain. We could have, and some pray that a return of a "robust housing market" is needed to fix the economy, put all those nail pounders and Wall Street fast talkers back to work doing what they'd been doing. But, that would only make matters worse.

Physicians learned long ago that leeching a wound doesn't heal the wounded, even if you've cornered the market on medical leeches.

It's Alive!!

My beloved Triage appears to be alive and well, but in stealth mode. I've not actually had the pleasure of meeting it. But the Times yesterday kind of let the cat out of the bag. If this isn't a description of Triage driven campaign building, I'd be hard pressed to do better. What's galling is that the Democrats happily ignored the issues in 2010, and have set us on the road to permanent minority rule. Just like a South American junta.

Issenberg, a he by the way, is publishing a book, "The Victory Lab: The Secret Science of Winning Campaigns". Alas, I wasn't a source. No royalties for me.

Over the last decade, almost entirely out of view, campaigns have modernized their techniques in such a way that nearly every member of the political press now lacks the specialized expertise to interpret what's going on. Campaign professionals have developed a new conceptual framework for understanding what moves votes. It's as if restaurant critics remained oblivious to a generation's worth of new chefs' tools and techniques and persisted in describing every dish that came out of the kitchen as either "grilled" or "broiled."

My first serious post college position was in Washington, DC (for the Civil Service Commission, which no longer exists; bet you didn't know that), in a group titled Office of Analytic Methods. I was the economist/econometrician, while one of the other worker bees was AbD in psychometrics. For reasons not yet discussed, I've long viewed any study prefixed psych- with suspicion; a means for the venal to manipulate the naive'. Advertising, "Mad Men" style, is the archetype. Eventually, we got "The Selling of the President 1968". Some 40 years on, and the number crunching has gotten evermore convoluted, possibly more sophisticated.

Oh, did I mention that I wandered into my local Barnes & Noble to see what's newish in the data/stat world? Yes, yes I did. And what to my wondering eyes did appear but "R For Dummies". I suppose that R will become the next Excel: any knucklehead will feel empowered to play math stat in the office, just as Excel empowered cube monkeys to self-identify as financial analysts. And we now know what that produced.

Campaigns have borrowed techniques from the social sciences, including behavioral psychology and statistical modeling. They have access to private collections of data and from their analysis of it have been able to reach empirical, if tentative, conclusions about what works and what doesn't.

And to quote my humble self, from Triage:

There is, available to the apparatchiks, both public data (the FEC here in the States) and data developed by their own organization. This latter data is, amorphously, expenditures (the source data that ends up at the FEC; their own they have, but opposition data must wait for FEC and may well not be sufficiently timely) and outcomes; perhaps simple polling results; perhaps some focus group results; perhaps some name recognition surveys. Social network data mining is also big these days (although I've not done enough research to know for sure that this could be a data source for outcomes).

Issenberg throws in the towel:

Breathless, and often fact-free, stories about "data mining" and "microtargeting" soon became plentiful. But few journalists had access to any of the campaigns' data, or even much understanding of the statistical techniques they used. We found ourselves at the mercy of self-promoting consultants who described how they were changing politics by ignoring stodgy old demographics and instead pinpointing voters according to their lifestyles. We played along, guilelessly imputing new mythic powers to microtargeting. In many retellings, data analysis became the reason George W. Bush was re-elected.

There has been, in the wake of Ryan's perversion, hand wringing from some of the press that fact-checking (which effort draws the ire of the Right Wingnuts, not surprisingly) in the face of such lying will take too much effort to police. The message is that Right Wingnuts will send a tsunami of falsehood, much never exposed as forcefully as the assaults. "Swift Boats" 24/7. Welcome to the new Gulag.

Indeed, the telling numbers wouldn't be polls but the individual probability scores that Mr. Obama's targeters developed (and update weekly) to predict how likely each voter in the country is to support him.

As Triage described, high granularity data, external to the campaigns can be used. One of the not so secret secrets in the quant world is that private databases exist, for a fee, to very fine detail. As you bend the mind, so you bend the finger on the voting lever.

But particularly in a polarized race like this one, where fewer than one-tenth of voters are moving between candidates, the most advanced thinking inside a campaign is just as likely to focus on fine-tuning statistical models to refine vote counts and improve techniques for efficiently identifying and mobilizing existing supporters.

So, we find:

...Mr. Romney deployed statistical models to track Iowa supporters and current vote counts for his rivals. It amounted to a largely invisible 21st-century upgrade to the traditional infrastructure of offices, phone banks and staff that most journalists visualized when they tossed around the term "organization."

Back in the 1980s I applied to, and was accepted into, the American University (the one in Washington, DC) Economic Journalism graduate program. For various reasons, I didn't get to go (you know who you are). I still have, more so recently with the advent of R in particular, much regret that I wasn't able to watch and participate in this evolution.

Apple for the Teacher

A worthwhile addiction is BookTV, C-SPAN2 for the weekend. There was a repeat of an interview with Diane Ravitch, from 2000, for her then current book, "Left Back: A Century of Battles over School Reform" (that's the subtitle today). She went to Wellesley, and sounded sane, so off to Amazon to see what she's been up to since.

"The Death and Life of the Great American School System: How Testing and Choice Are Undermining Education" is the latest. Reading through the comments, this one is of note (from one Andrew Wolfe):

Teacher-bashing, so in vogue among the "reformers" dominating the national discussion, is rejected by Dr. Ravitch. How could the unions be responsible for so much failure when, she asks, traditionally, the highest scores in the nation are posted by strong union states such as Massachusetts (best results in the nation) and the lowest scores in the south, where unions are weak or non-existent?

The whole teacher bashing, especially union bashing, to me has from inception been strictly about Right Wingnuts looking to end the teaching of evolution, and any other reality based knowledge. Since the curricula are created by Management, and the texts largely manipulated by Texas (Google for it; because texts are built to the demands of large customers, and Texas has such clout, Texas frames the content of many texts), blaming the teachers is just propaganda.

The thrust of her discussion during the interview was that education, if we mean it that we're a Democracy, must be egalitarian and public. Massachusetts established public education. They seem to get it right.

One point she makes, but I remain confused about, is whether consolidated schools are better than smaller ones. She is against early "tracking" of students. On the other hand, I went to public schools about eighty miles west of Wellesley, in Springfield. At that time, there were four public high schools: Trade, Commerce, Technical, and Classical; they catered to the sort of students you might expect. I went to Classical, big surprise. The thing is, I don't recall being tested in, either voluntarily or mandatorily. The social sifting was sufficient. It was known as Palestine High, since all the Jewish kids went there; and not just Springfield kids, but some from neighboring towns. I don't recall the details, but there was some agreement that allowed it. Kind of like a public prep school.

Goodbye Mr. Roboto

So, this whole robots thingee has led me to scavenge for data. Still haven't found hard numbers with regard to labour hours per unit (automobile or other wise), although the Times article referred to in an earlier post has some speculative numbers for Philips.

I found this posting in my travels.

And the result of that will be a massive drop in consumer spending and consumer confidence. The point is that robots take jobs and incomes but do not act as "end consumers" in the economy. Robots do consume energy and resources but these are inputs to production. Without end consumers to drive the economy, the result will be a deflationary spiral. Many of the robots would be shut down. Imagine production robots used by General Motors. If there are no humans with income and confidence to buy cars, the robots will be shut down.

The quote isn't in the post, but a comment from one Steve T; scroll down to the second comment. I must say, I couldn't have said it better myself. Read through the entire comment. No, I'm not Steve T, but he has to be my lost twin.

What isn't discussed or understood sufficiently is that the "knowledge jobs" that some, including Left Wingnuts, are so enamoured of are disproportionately overhead or purely parasitic, in more pointed words: welfare queen jobs. In the former case, positions labeled management or analyst or administration and the like are explicitly categorized as non-production by economists, because they don't participate in production of output. They're overhead. In the latter case, such as that vampire squid financial services, such positions just syphon real productivity (in the form of moolah) from the economy.

Where we end up: It's the Distribution, Stupid. Without a distribution mechanism capitalism collapses, and sooner than without the robots, since the robotic movement accelerates the income and wealth transfer from the many to the few. Have a nice day. And I'll stop the repetitive robotic typing.

Body Snatchers

You have to watch this. So creepy it's cool.

You Want Fries With That?

"You want fries with that?" We all have heard that as a putdown of someone who just screwed up. Tom Friedman adopts the persona of the Right Wingnut, without the Nut. I never bought his act, and today he steps in it, again. Such utter nonsense.

Let's start with the basic premise: today's upheaval in the middle class is just like the eviction of farmers to factories in the 19th and 20th centuries, and that this is a Good Thing. What's going on today in the BRICs, China particularly, is much the same as back then; with the same result. Rural poverty is exchanged for urban poverty. As one Indian of my acquaintance put it, "you can earn a dollar a day in the fields in cow dung, or a dollar a day in an air conditioned office. Same wage, different demands; you need to learn office skills, but same wage. Take your pick." The BRICs have been "economic miracles" through indentured servitude, with a few billionaires and billions of hands holding up capitalists.

Friedman's notion only works if the demand for labour in the target sector matches the evicted labour in the source sector(s). In 19th and early 20th century USofA, with modest capital/labour ratios, that mostly worked out. Recall Henry Ford, who raised wages in part so that his workers could afford his cars. Smart man that. He also had this to say: "A business that makes nothing but money is a poor business."

Friedman tells a tale of a Boston area robot outfit, Rethink Robotics, and waxes rhapsodic on robots empowering people to do more. And create jobs.

...its cheap, easy-to-use, safe robot will be to industrial robots what the personal computer was to the mainframe computer, or the iPhone was to the traditional phone. That is, it will bring robots to the small business and even home and enable people to write apps for them the way they do with PCs and iPhones...

Of course, folks don't go buy a PC or iPhone and *PROGRAM* the damn things!!! Well, a few anti-social nerds who then create a Facebook or something. But not more than a handful. Moreover, studies were done (and continue) on the effect of PCs in the office, and concluded that by and large PCs added to overhead, since they tended to engage the users in form and less on content. Graphical machines, starting with the Mac and thence to the Windows PC, were the worst offenders. Some companies are finally getting wise, and banning the Power Point Presentation. And not a minute too soon.

"Just as the PC did not replace workers but empowered them to do many new things," argues Brooks, the same will happen with the Rethink robot. "Companies will become even more competitive, and we will be able to keep more jobs here. ... The minute you say 'robots' people say: 'It's going to take away jobs. But that is not true. It doesn't take away jobs. It will change how you do them," the way the PC did not get rid of secretaries but changed what they did.

Neither of these guys lives in the real world. What's been the net job effect of industrial robots? Net? Less than zero. Fact is, as the PC took over in the office, secretaries were shown the door. Workers were told to "get keyboard skills, or else", and did their own documents. Who amongst you, regular readers, has a secretary or even knows one? Damn few, I'll wager.

So, what is the labour distribution in the USofA these days? In other words, is there unmet demand for robot makers and programmers sufficient to soak up all those displaced factory and office workers? Not so you'd notice. Here's a table of data from the BLS:

2010 National Employment Matrix title and code Employment Change, 2010-20 Median annual
2010 2020 Number Percent wage, May 2010
00-0000 Total, All Occupations 143,068.2 163,537.1 20,468.9 14.3 $33,840
31-0000 Healthcare Support Occupations 4,190.0 5,633.7 1,443.7 34.5 24,760
39-0000 Personal Care and Service Occupations 4,994.7 6,331.4 1,336.6 26.8 20,640
29-0000 Healthcare Practitioners and Technical Occupations 7,799.3 9,819.0 2,019.7 25.9 58,490
21-0000 Community and Social Service Occupations 2,402.7 2,985.0 582.3 24.2 39,280
47-0000 Construction and Extraction Occupations 6,328.0 7,735.2 1,407.2 22.2 39,080
15-0000 Computer and Mathematical Occupations 3,542.8 4,321.1 778.3 22.0 73,720
13-0000 Business and Financial Operations Occupations 6,789.2 7,961.7 1,172.5 17.3 60,670
19-0000 Life, Physical, and Social Science Occupations 1,228.8 1,419.6 190.8 15.5 58,530
25-0000 Education, Training, and Library Occupations 9,193.6 10,597.3 1,403.7 15.3 45,690
53-0000 Transportation and Material Moving Occupations 9,004.8 10,333.4 1,328.7 14.8 28,400
49-0000 Installation, Maintenance, and Repair Occupations 5,428.6 6,228.7 800.2 14.7 40,120
27-0000 Arts, Design, Entertainment, Sports, and Media Occupations 2,708.5 3,051.0 342.5 12.6 42,870
41-0000 Sales and Related Occupations 14,915.6 16,784.7 1,869.1 12.5 24,370
37-0000 Building and Grounds Cleaning and Maintenance Occupations 5,498.5 6,162.5 664.0 12.1 22,490
33-0000 Protective Service Occupations 3,302.5 3,667.0 364.5 11.0 36,660
23-0000 Legal Occupations 1,211.9 1,342.9 131.0 10.8 74,580
17-0000 Architecture and Engineering Occupations 2,433.4 2,686.2 252.8 10.4 70,610
43-0000 Office and Administrative Support Occupations 22,602.5 24,938.2 2,335.7 10.3 30,710
35-0000 Food Preparation and Serving Related Occupations 11,150.3 12,242.8 1,092.5 9.8 18,770
11-0000 Management Occupations 8,776.1 9,391.9 615.8 7.0 91,440
51-0000 Production Occupations 8,594.4 8,951.2 356.8 4.2 30,330
45-0000 Farming, Fishing, and Forestry Occupations 972.1 952.6 -19.4 -2.0 19,630

BLS expects the 43- series to burgeon. But with these robots taking over, of course it won't. The 51- series is manufacturing, and shows little growth, and will have even less with robots. The labour hours per automobile, thanks to robotics, is a fraction of what it was in 1960. With robotics displacing labour across all industries, asking about your fries desire too, the issue is distribution of productivity gains. As it is, capitalists get nearly all of it. Historically, they share it with labour only where unions pressure them to do so. Otherwise, take a hike.

The telling datum, not yet found, is the exact replacement ratio of robotics for humans in even one manufacturing instance. Automobiles would be the prime instance, since the auto assembly line was among (if not the first) the early adopters. Clearly, capitalists wouldn't adopt robotics if it ended up raising the unit cost of their product. Capitalists can be stupid, but not over the last 50 years. If robotics were a cost sink, they'd have drop them like a hot coal. They haven't. Where they are stupid is in ignoring Ford's understanding that you can't grow your business organically (i.e., not just buying up your competition) if there isn't money in the hands of folks demanding your product. What goes around comes around. Turn off the merry-go-round...

Oh, and by the bye. It takes substantially more brains to run a farm than to move parts on an assembly line. The shibboleth that moving farmers to factories raised skill levels really should have been staked long ago.

Money Makes the World Go Round

It's been a while since I've vented about the silliness of the DNC in turning down the Triage application; in particular the mapping part. What to my wondering eyes did appear, but a US map half done in today's Times. It's half done, since it displays the input, $$$, but doesn't show the output, it seems. Again, in Triage terms, output would be some measure of effectiveness. Can be done, as Triage demonstrated.

To be fair, it may not even be the Times who did the work. The source cite is "Campaign Media Analysis Group at Kantar Media", but doesn't say whether Kantar provided only the raw numbers, or both the numbers and the map. Since the Times is well known to use R for its data graphics, my guess is the former. The states are graphed with their blue/red leaning (without indicating whether the lean was measured correlatively with the spends), so a time series of the map would be closer to the real time thrust of Triage (googleVis supports such graph animation, sort of; R-bloggers has a number of posts on point). Even so, bravo.